The Republican War on Wages

The conflict between the two major parties over inequality has given rise to the most fundamental debate about economic issues since the end of World War II. Superficially, there has been some convergence. The reality that our increasing national wealth has gone disproportionately to a small percentage of the population has become impossible to ignore — even by Republican candidates seeking to appeal to a very conservative primary electorate. Yet the proposed solutions suggested to the problem by the two parties are even more diametrically opposed than often realized.

To a great extent, the inequality debate has been presented as a choice between Democrats advocating specific interventions to diminish the wealth and income gaps, and Republicans countering that this will only exacerbate the situation; instead, they call for removing obstacles to economic growth. But this is a very incomplete picture of the Republicans’ agenda. What is too infrequently made explicit is that prominent on their list of impediments to that growth are both that wages earned by many working people are too high, and that several legal and institutional factors obstruct efforts to lower them.

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Every discussion of party differences about how to diminish “excessive”— i.e., socially and economically dysfunctional — inequality includes the issue of taxation. The Republican tax agenda actually seeks to increase the inequality gap, both by diminishing the share of taxes paid by the wealthiest, and in turn, reducing the revenue available for paying public sector salaries, subsidizing higher education for working and middle-class families, providing income supplements to the working poor and easing the cost of health care.

Less often noted, though, is that far from opposing policy interventions that affect wage levels, Republicans actively pursue efforts to restrain wages — and push them lower. One of the most important is the assault on the bipartisan efforts of the Federal Reserve under Ben Bernanke and Janet Yellen to combat unemployment through quantitative easing and low interest rates. Paul Krugman has documented the persistence of conservative predictions that these policies would somehow simultaneously cause inflation, recession and general economic malaise — outcomes in total contradiction to the impact they have actually had since their adoption in 2010. I have served with some of the leading members of this “Chicken Little Caucus” for years on the House Financial Services Committee and have closely watched them since. It is clear to me that this is not simply a specific disagreement over monetary policy, but represents their expression of fundamental opposition to the idea that the Fed should be concerned with preventing both damaging inflation and low job totals.

The Fed’s charter was amended in 1978 by the Humphrey-Hawkins bill to give it what is known as the “dual mandate.” Unlike other central banks, the Federal Reserve is charged with maintaining both price stability and high employment. It is a sign of how far right the Republican Party has moved that this latter goal has now become controversial. (Part of the explanation for its new prominence as an issue is that it did not receive anything like the equal attention the statute calls for until Bernanke took over and had to deal with the Great Recession.) While some Republicans have introduced legislation to remove employment from the mandate, political prudence has kept them from putting it on the floor. Blaming Obama because unemployment has not fallen fast enough is hard enough in the face of the numbers, without explicitly repudiating a national pro-jobs goal. Instead, they seek its de facto elimination by denouncing any actions the Fed takes to execute it as not only mistaken but illegitimate.

Some other Republican income-depressing initiatives are more familiar: fighting any increase in — or even the very concept of — the minimum wage; denouncing any move toward local efforts to require a “living wage”; repealing Davis-Bacon so that construction workers can be paid less; and their general assault on unions both in the public and private sectors. While conservative officeholders discreetly refrain from criticizing private employers like Walmart that announce increases in compensation, they are of course wholly absent from the list of those who praise these steps. Meanwhile, conservative commentators free of electoral concerns denounce them.

What is missing from much of the public debate is that these are not simply independent attempts to combat specific policies that their advocates hold to be unwise. Collectively, these efforts add up to a comprehensive, intellectually interlinked program to diminish the compensation paid to a very wide range of wage earners. The efforts are given greater force by the interaction of two important factors: the conservative drive to dismantle federal programs and send their missions to the states; and the interstate competition for economic activity that then ensues.

Once again, this first phenomenon is an indication of how far right the Republicans have moved. Prominent among the Federalizers of public functions whose work they now seek to undo is Dwight Eisenhower, whose signal accomplishment of the interstate highway program would be essentially de-federalized and turned back to the states by today’s conservatives. One the main attractions this effort holds for its advocates is the substantially lower pay for those who build highways.

The role of that second factor — the interstate competition for industry as a potent force multiplier for all of the above — is graphically demonstrated by one of the most significant and least generally recognized examples of the Republicans assault on working people’s wages I have seen: The use of public money by Tennessee Republicans to coerce the company and the workers at a Volkswagen factory there to abandon what had been a mutual desire to recognize the United Auto Workers as the bargaining agent at the plant. It is one more sign of the strong rightward shift of that party that among the leaders of this successful extortion was a man generally seen as a leader of the reasonable, non-tea party wing, Sen. Bob Corker.

The facts are stark and undisputed. Having had good relations with unions in Germany, Volkswagen itself filed a request on Feb. 4, 2014, for a union representation election with the National Labor Relations Board to be held that month.

The UAW noted that it had signatures in support of the union from a majority of the workers, and the company’s position was indicated by complaints from anti-union workers that it was “colluding” with the union, and by the statement in the Detroit Free Press on Feb. 11 that “the crusade by anti-union forces in Tennessee, including the state’s Governor and senior Senator, is as much a fight with Volkswagen management as with the UAW.” The expectation was that the union would be chosen by a majority of the workers.

But then as the Free Press reported, the Tennessee Republican Party intervened, using public money as an anti-union club. State Sen. Bo Watson, a Republican from Chattanooga, said in a statement, “Should the workers choose to be represented by the United Auto Workers, then I believe additional incentives for expansion will have a very tough time passing the Tennessee Senate.” Tennessee had planning to give VW public funds to increase its manufacturing capacity — funds which, evidently, were to be withheld if the majority of workers exercised their federal statutory right to support union representation. Any doubt of the reality of this impending punishment was dispelled two days later when a news story quoted Corker as volunteering that he had been “‘assured’ that if workers at the Volkswagen AG plant in his hometown of Chattanooga reject United Auto Worker representation, the company will reward the plant with a new product to build.” Volkswagen, it should be clear, denied that this was its position. Corker, the former mayor of the city, was using the company — against its wishes — to reinforce his fellow Republican legislators’ extortionate threat.

It worked. The UAW lost the election, 712-626. No one can be sure what the outcome would have been if workers — of whom a majority had signed pro-union cards before the election — had been free to vote with no fear that jobs would be lost. But if as few as 3.2 percent of them had been intimidated into abandoning their support for a union, Corker is entitled to the pride he expressed on March 13 for his “big part” in what he hailed as “a great victory for our community, for our state, for our citizens.”

The last crucial part of this tale is why Corker and his colleagues used so much muscle to protect Volkswagen from a union it welcomed. Why was this a victory for his “community … state … (and) … citizens”? The answer he and others give is that it helped hold down wages, not just at the Volkswagen plant, but throughout the state. Had the UAW won, they said, it could have boosted pay for their members. This, in turn, would have put upward pressure on wages elsewhere in the state, and this, in turn, would have made it harder for Tennessee to lure businesses from other, higher wage jurisdictions.

The morals — and morality — of this sordid story are too important not to emphasize. First, it stands as a repudiation of the argument that unions do not help raise wages. If the Tennessee Republicans truly believed that the UAW would not have been able to boost the income of the workers, they would not have been so worried about the consequences of its winning. Second, it is an even more explicit acknowledgment that keeping wages lower than they might otherwise be is a deliberate part of the conservatives’ strategy for economic development in their states. (Note that this is a concern about the competitive impact of higher wages vis-à-vis other parts of America. Apparently Volkswagen did not fear losing sales to its German parent, where it works well with unions.)

Finally, it demonstrates that if Republicans succeed in having more and more programs conducted at the state as opposed to the national level, it would make it easier and easier to depress the wages of those who carry them out — and that’s an agenda that should concern every working family in America.